Sustainability and Profitability in China Airlines Cargo - Case Study Example

Sustainability and Profitability: China Airlines Cargo Case Name Course Name and Code Date Background Information China Cargo Airlines is a cargo Airline that was established in 1998 and has a head office on Hongqiao International Airport. China Cargo Airlines is an all-cargo airline that is dedicated will freight services and utilizes China Eastern Airlines operational network. Other hubs that China Cargo Airlines operates at includes International Airport, Shanghai Pudong, and International Airport. China Cargo Airlines has a fleet size of twelve planes and operates to 20 destinations. The parent company of China Cargo Airlines is the China Eastern Airlines. China Cargo Airlines is in an alliance of SkyTeam Cargo. The company plans to acquire additional planes because the market size is growing and the customers continue to understand product offering. It is imperative to note China Cargo Airlines operates in a competitive industry, which requires high-quality services and operates across different geographical boundaries. Situation Analysis The geographical requirements and operational strategies are important since it has to reflect the changing business dynamics (Lei and O’Connell, 2011). The aim of the business is to sustain the business and continue to generate profits and revenues in addition to increasing the market share (Wang, 2007). The airline industry requires extensive engagement with the customers and the quality of interaction influences the business operationi. Therefore, the aim of the business proposal is to analyze the business operating environment and internal processes and provide recommendations on the future of the company to address the requirements of sustainability and profitability. Proposed Conceptual Framework, Theories and Models PEST Analysis The PEST analysis is a framework that provides analysis of an organization from the perspective of politics, economics, social and technology. The following is PEST analysis of China Airlines Cargo: Political China Airlines Cargo operates in a highly regulated political environment. The political policies of a country towards airlines such as regulating price while restricting new entrants, or issuing more independence impacts the success of airline companies (Hong and Zhang, 2010). As such, China Cargo Airline can easily achieve its success through operating in more countries that have deregulation, open skies and independence policies (Wang et al. 2014). Additionally, focusing on the political stability of countries is an added advantage while engaging the local political dispensation to support the requirements and expectations of China Airlines Cargo. Economic The current global economic growth generates enormous opportunity for China Airline Cargo (Lei and O’Connell, 2011). The benefits of economy growth results to high goods-flow hence the capability to improve the industry profitability (Wu, He and Cao, 2013). Additionally, increasingly globalization poses positivism due to the free movement of goods. Contrarily, economic stagnation poses negative outcomes such as restrict travels and much lower fares. As such China Airlines cargo need to strategize on how to reduce investment during economic weaker periods to prevent loss. Social An increase in consumer class implies consumers demanding for good terms and services from a company (Wu, He and Cao, 2013). As such, airline industries have to come up with better terms and services so as to win the heart of consumers (Wang, 2007). Additionally, the consumer profile is changing whereby the clients are economically minded while selecting companies. Therefore, China Cargo Airlines needs to apply a new strategy that is fair based on the country social positionii. Technology The intense competition in the airline industry requires airline companies to adapt to the latest communication systems and equipmentiii. As such, the China Cargo Airlines will have the ability to survive in the current operating environment and newer environment (Wu, He and Cao, 2013). Additionally, equipping the latest technology would lower the company fuel consumption, airline operations and improve on efficiency hence attaining much more profits and ability to re-position in the market industry. SWOT Analysis The SWOT Analysis stands for strengths, weaknesses, opportunities and threats. The following is discussion of SWOT Analysis of China Cargo Airlines: Strengths China Airlines Cargo parent company is the China Eastern Airlines meaning it has a strong organizational and management approach because of the large experience from the parent company (Lei and O’Connell, 2011). The employees have the skills and experiences to accomplish cargo transport requirements (Wang, 2007). China Airlines Cargo utilizes the strength and capacities, and brand recognition of the parent company to advance the operational requirements (Hong and Zhang, 2010). Sharing of the resources between the two companies is possible meaning any problem can be addressed easily. China Cargo Airlines operate in a region that few cargo airline services exist, creating a competitive advantage for the company. Weaknesses Any negative reputation from the parent company may affect the reputation of the China Airlines Cargo because of the axis of association (Chow and Fung, 2009). The airline industry is dynamic, and the employees may easily move from one airline to the next (Hong and Zhang, 2010). The company also operates in a small region because the twenty destinations do not afford the company with enough operational space to balance the profitability and sustainability requirements. Opportunities The economy and business operations across the world are changing, and globalization and internationalization have become an integral component (Lei and O’Connell, 2011). Goods and services have to be moved across the world meaning China Airlines Cargo can capitalize the requirementiv (Chow and Fung, 2009). The company can open additional hubs and destination to improve the span of operations. The company should embrace sustainability measures to reduce the costs of operation even if the approach would be a long term strategy (Wu, He and Cao, 2013). China Airlines Cargo should encourage a learning organization framework in which it is able to adjust to the different geographic areas due to diversity and associated variables. Threats In the airline industry, numerous threats exist. The common one is competition in which international and local organizations can develop cargo airlines, or international business may enter the market (Chow and Fung, 2009). Large companies such as DHL and FedEx are examples of competitive business entities that affects the operations at China Airlines Cargo. The government may also adjust and create challenges through reviewing the regulations and policies (Lei and O’Connell, 2011). The effectiveness of the airlines reflects the relationship of a country with other countries, and the foreign relationship is important in the effectiveness (Hong and Zhang, 2010). If misunderstandings and conflicts occur between countries, the effectiveness of the airlines cargo can be affected. In addition, global warming and sustainable measures influence the internal and external operations of the airline. Hence, these numerous factors have to be considered in determining the sustainability and profitability of the establishment. Resource Based View The resource-based view is a management framework used to assess the strategic business assets and determine the relevance of the assets in advancing the requirements of the organization (Chow and Fung, 2009). The ideal of resource-based view is premised on the understanding of the efficient and effective application of importance resources in ensuring the company benefits from a competitive advantage. It analyses a resource from a perspective of value, rarity, imitability and organization (Hong and Zhang, 2010). A resource should have these components to ensure it provides a competitive advantage for the company. In the case of China Airlines Cargo, the variables of value, rarity, imitability and organization in fulfilling its strategic requirements and needs. The value of China Airlines Cargo includes the twelve cargo planes and operates from 4 hubs. In addition, it has 20 destinations in the Asian regions. The rarity is attributed as among the few cargo airlines in Asian and specifically the only airline that has a direct relationship with Chinese business operations (Hong and Zhang, 2010). The imitability approach may be based on profit, service and the customers (people). China Airlines Cargo is an organization that brings different stakeholders with different capabilities (Hong and Zhang, 2010). The highest shareholders of the company are other airlines meaning these airlines sources cargo jobs for China Airlines Cargo (Chow and Fung, 2009). For example, the parent company owns more than 51% of the shares, which means it may source customers for the establishment (China Eastern Airlines, 2015). Proposed Data Resources China Airlines is an international business because it operates across boundaries. Some of the data will be obtained from publically available information such as from the company’s website, from the media information, financial documents, and other resources that provide information regarding the company. Additional information will be obtained from academic resources to complement and supplement the information of the company. Therefore, these numerous data resources will be used to complete the paper and ensure the quality of the paper is high. References Chow, C.K.W. and Fung, M.K.Y., 2009. Efficiencies and scope economies of Chinese airports in moving passengers and cargo. Journal of Air Transport Management, 15(6), pp. 324-329. Hong, S. and Zhang, A., 2010. An efficiency study of airlines and air cargo/passenger divisions: a DEA approach. World Review of Intermodal Transportation Research, 3(1-2), pp. 137-149. Lei, Z. and O’Connell, J.F., 2011. The evolving landscape of Chinese aviation policies and impact of a deregulating environment on Chinese carriers. Journal of Transport Geography, 19(4), pp. 829-839. Wang, K., Fan, X., Fu, X. and Zhou, Y., 2014. Benchmarking the performance of Chinese airlines: An investigation of productivity, yield and cost competitiveness. Journal of Air Transport Management, 38, pp. 3-14. China Eastern Airlines. (2015). 2015 Financial report. Retrieved from http://en.ceair.com/upload/2016/5/3143052216.pdf Wang, R. T., 2007. Improving service quality using quality function deployment: The air cargo sector of China airlines. Journal of Air Transport Management, 13(4), pp. 221-228. Wu, Y., He, C. and Cao, X., 2013. The impact of environmental variables on the efficiency of Chinese and other non-Chinese airlines. Journal of Air Transport Management, 29, pp. 35-38. Plan for Completion Read More